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REGION : Hospital Cool to Merger With Rival Catholic Facility

March 03, 1994

Operators of South Bay Hospital in Redondo Beach have given a cool reception to a merger proposal from a rival hospital in Torrance, labeling it "unacceptable" and saying negotiations are under way with two other potential operators.

But the merger proposal, from Little Company of Mary Health Services, will still be discussed at a public meeting at the hospital today.

Little Company of Mary announced Friday that it was interested in buying the 203-bed South Bay Hospital and merging it with its 374-bed nonprofit Catholic hospital in Torrance.

That would reduce the number of acute-care hospitals from four to three in the southern South Bay area.

The financially ailing South Bay Hospital recently lost a major managed-care contract with Cigna Health Care of California that accounted for 22% of its net revenue. The hospital also has been hurt by changes in the health-care business, such as shorter patient stays and increased emphasis on managed care.

The Little Company of Mary proposal calls for creating a single hospital with two sites. South Bay Hospital, which is now publicly owned and privately managed, would become a nonprofit Catholic facility.

But the proposal was deemed "unacceptable" by South Bay Hospital Executive Director Dennis Bruns. In a letter dated Friday, Bruns told Little Company of Mary officials that South Bay Hospital's operator, American Medical International, "is currently in negotiations with other prospective operators."

The sale of South Bay Hospital would be complicated by its status as a publicly owned facility that is leased to a commercial hospital chain.

Negotiations would involve at least three parties: the potential buyer, AMI and the Beach Cities Health District, the public agency that owns the hospital.

Voters in the three beach cities might be required to approve a sale, depending on the terms of the agreement.

The health district's board of directors plans to discuss the Little Company of Mary proposal at its meeting at 5 p.m. today. The meeting, in the auditorium at South Bay Hospital, 514 N. Prospect Ave, is open to the public.

--DEBORAH SCHOCH

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